On Tuesday, H.P., the world’s largest technology company, reported double-digit declines in sales across its major businesses in its second quarter. H.P. also said that it would cut about 2 percent of its 321,000-person work force, or close to 6,420 people, as it tries to reduce costs.
The layoffs are on top of the tens of thousands of people already being let go as part of H.P.’s acquisition of Electronic Data Systems, a large services company.
The computer and printer maker also issued a more pessimistic full-year revenue forecast. It now expects revenue to fall from 4 percent to 5 percent from the $118.4 billion reported last year, while it had previously predicted that sales would fall from 2 percent to 5 percent.
Mark V Hurd the chief executive at H.P., pointed to better sales in China and among consumers in the United States as the only two bright spots of note. Over all, however, he remained somber about the broad economic trends that affect the technology sector.
“I just think we are going to need another quarter of data to really make a meaningful statement about any upturn or anything like that,” Mr. Hurd said in a conference call with analysts to discuss the second-quarter results. “Our guidance is meant to be a sort of ‘steady as she goes.’ ”
H.P., with a broad range of businesses spread across the globe, serves as a bellwether of the technology sector. The forecast from H.P., the world’s largest PC maker, comes in contrast to the most recent forecast from intel, the world’s largest chip maker. Intel executives have maintained that the personal computer market appears to have reached bottom weeks ago and that market conditions are better than expected midway through the second quarter.
Catherine A. Lesjak, the chief financial officer at H.P., declined to issue any similar, upbeat remarks about PC sales, saying only that “demand looks a lot like it did last quarter.”
Investors appeared rattled at least in part by H.P.’s revenue forecast that reinforced sentiment that the economy is not yet improving. Following the release of the results, H.P.’s shares dropped close to 5 percent, during after-hours trading, to $34.81. Shares of H.P. had closed in regular trading Tuesday, up more than 2 percent at $36.58.
H.P. said net income in the second quarter ended April 30 fell 17 percent to $1.7 billion, or 70 cents a share, down from a profit of $2.1 billion, or 80 cents a share, in the same period last year. Excluding charges, H.P., based in Palo Alto, Calif., earned 88 cents a share for the period ended April 30.
H.P. surpassed the earnings expectations of analysts surveyed by Thomson Reuters by 2 cents, while its revenue matched expectations.
Like other hardware makers, H.P. has had big declines in its major businesses. Notebook PC sales fell 13 percent; computer server and storage sales tumbled 28 percent; software sales fell 15 percent and sales of printers and related technology fell 23 percent.
Given such circumstances, Mr. Hurd focused on H.P.’s continued efforts to cut costs, allowing it to stay on pace with earnings expectations even while revenue was harder to find. The company reported record cash flow from operations of $5 billion in the quarter.
“The results do point to the stability of the H.P. model,” said Shannon Cross, the managing director of Cross Research, an equities research firm.
Mr. Hurd often emphasizes H.P.’s ability to alter its costs from quarter-to-quarter by making tweaks to the company’s vast supply chain. In addition, H.P.’s $13.9 billion purchase of E.D.S. last year has given it a new source revenue from services that has aided recent results.
H.P.’s services revenue increased 99 percent with the addition of E.D.S., to $8.5 billion. Since services deals often cover a number of years, the revenue tied to the agreements tends to remain steadier than hardware sales. Mr. Hurd’s focus on running such a lean organization does come with certain costs. The latest round of layoffs adds to the massive E.D.S.-related cuts and salary reductions across the company. “It all has to impact morale,” Ms. Cross said. “But I think people also understand that tough decisions need to be made.”
